After nearly five months wait, the government on Friday cleared UK's BP Plc buying 30% stake in most of Reliance Industries' (RIL) oil and gas blocks, including the showpiece KG-D6 gas fields, for $7.2 billion.
The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Manmohan Singh, on Friday approved BP buying staking in RIL's 21 blocks, sources said.
The CCEA could not meet on its scheduled day on Thursday as the Oil Ministry had not circulated the agenda in time.
RIL, the country's most valuable company, had on February 21 agreed to sell 30% stake in 23 out of its 29 oil and gas blocks to London-based BP Plc for $7.2 billion, and may get an additional $1.8 billion if the two explorers find more hydrocarbons.
The CCEA approved sale of stake only 21 blocks as exploration status in the two remaining blocks was in dispute.
BP will have to furnish a bank guarantee and performance guarantee as has been prescribed under the production sharing contract.
The deal, that may increase to $20 billion with future performance payments and investment, will give Reliance access to BP's expertise in deep-water drilling and accelerate development and production at its fields particularly the under-performing eastern offshore KG-D6.
For BP, which has been struggling to battle back from the disastrous Gulf of Mexico oil-spill disaster last year, the transaction is a chance to enter a market where energy demand is growing at 5-8%.
Officials said RIL had on February 25 applied for government nod for the stake sale. New Exploration Licencing Policy, under which Reliance had won the oil and gas blocks, allowed for sale or assignment of participating interest (farm-out), which is routinely approved by the Oil Ministry.
But the ministry, even though competent to approve the deal, decided to refer it to the CCEA.
